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6.2 Globalisation & trade restrictions

Topic 6.2 - Globalisation and trade restrictions

Globalisation is about the growing interdependence and integration of the world’s economies.

This section of the Cambridge IGCSE Economics (0455) syllabus covers the following topics. Click on the relevant hyperlink to access the resources for this part of the course.

SectionTopicGuidance
6.2.1Definition of globalisation- 
6.2.2

Causes and consequences of changes in globalisation

This is a new addition to the syllabus, not featured in the legacy syllabus

Causes of changes in globalisation:
– changes in trade restrictions
– changes in transport costs
– changes in communication costs
– movement of multinational companies (MNCs)

Effects of changes in globalisation on:
– international trade
– competition
– the environment
– migration
– income distribution
– economic development

6.2.3Role of multinational companies (MNCs)MNCs and their advantages and disadvantages to host countries and home countries
6.2.4Types of trade restrictions / methods of protectionTariffs, import quotas, subsidies, and embargoes
6.2.5

Reasons for trade restrictions

The legacy syllabus only focused on (i) infant industry, (ii) declining industry, (iii) strategic industry, and (iv) avoidance of dumping.
Four more reasons have been added to the new syllabus.
  • protect infant (sunrise) industries
  • protect declining (sunset) industries
  • protect strategic industries
  • avoid dumping
  • reduce a deficit on the current account of the balance of payments
  • raise tax revenue
  • restrict the import of demerit goods
  • promote environmental sustainability
6.2.6Consequences of trade restrictions
  • Impact of trade restrictions on the home country and its trading partners
  • Advantages and disadvantages of restricting free trade

Other InThinking resources for this section of the syllabus include the following:

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